Both the iShares Ethereum Trust ETF (ETHA +0.14%)and Bitwise Crypto Industry Innovators ETF (BITQ +2.53%)target the cryptocurrency ecosystem but take notably different approaches. This comparison highlights how these approaches differ in cost, performance, risk, and portfolio makeup for investors considering crypto-linked ETFs.

Snapshot (cost & size)

The 1-yr return represents total return over the trailing 12 months.

BITQ’s expense ratio is higher than ETHA’s, so it may cost more to hold over time, though ETHA’s lower fee comes with single-asset concentration.

Performance & risk comparison

What’s inside

BITQ provides exposure to the crypto economy without holding digital assets directly, instead investing in 33 companies that participate in the sector. Its portfolio leans heavily toward financial services, with notable positions in IREN Ltd. (IREN +8.46%), Coinbase (COIN 2.77%), and Strategy Inc. (MSTR +1.32%)  This structure introduces both stock market and crypto-industry risks, potentially smoothing out some of the extreme volatility of direct crypto holdings.

ETHA, by contrast, is a single-asset trust exclusively tracking the price of Ethereum (ETH +0.08%). This makes it highly concentrated, with risk and returns closely tied to the price of Ether itself and no diversification from other sectors or companies.

What this means for investors

As with cryptocurrencies, investors must be aware of the risks of crypto-related ETFs, whether directly or indirectly. ETHA especially carries a higher risk because it’s been on the market for less than 2 years and holds only Ethereum. So the fund’s price can be highly volatile and reliant on the coin’s success.

And while BITQ’s holdings are actual stocks, many of its top holdings are tied to the crypto market and can experience high volatility in turn. The ETF has delivered an approximate -6% return since its 2021 inception.

It should also be noted that no beta measurement is provided for either ETF. The beta measures price volatility relative to the S&P 500, and is often calculated from five-year weekly returns. And since both funds are less than five years old, that type of measurement isn’t applicable at the moment.

Also, neither funds offer dividend payouts, unlike many ETFs. But plain and simple: if investors are willing to take on more risk for the potential of higher long-term returns, ETHA is ideal. But for less volatile exposure to the crypto market, BITQ is a solid choice.

Glossary

ETF (Exchange-traded fund): A fund that trades on stock exchanges like a stock, holding a basket of assets.
Trust ETF: An ETF structure that directly holds a specific asset, such as a cryptocurrency, on investors’ behalf.
Expense ratio: Annual fund operating costs expressed as a percentage of the fund’s average assets.
AUM (Assets under management): The total market value of all assets a fund or manager oversees.
Beta: A measure of an investment’s volatility compared with a benchmark index, typically the S&P 500.
Max drawdown: The largest peak-to-trough decline in an investment’s value over a specified period.
Total return: Investment performance including price changes plus any income, assuming all payouts are reinvested.
Single-asset concentration: When a fund invests in only one asset, increasing exposure to that asset’s specific risks.
Diversification: Spreading investments across multiple assets to reduce the impact of any single holding’s performance.
Crypto-industry stocks: Public companies whose main business activities are tied to cryptocurrencies or blockchain technology.
Volatility: The degree to which an investment’s price moves up and down over time.
Leverage: Using borrowed money or financial instruments to increase potential returns, which also increases potential losses.

For more guidance on ETF investing, check out the full guide at this link.